Tag Archive | "United States dollar"

Dollar Strength Opportunity


The daily news shows us again and again how we can take advantage of the dollar’s strength now for future profits.

 

wsj chart

The chart above is from the New York Times article  Dollar’s Rise Lifts Imports and Widens Trade Gap.

This article highlights how the strength of the US dollar helped create March’s trade deficit of $51.4 billion.  The 43 percent increase over February’s gap of $35.9 billion., was the highest gap in six and a half years.

That gap comes in part because the dollar has been gaining in value against other currencies, making foreign goods cheaper for American consumers to buy.  The cost of making US goods (in terms of other currencies) in US factories rises as the dollar strengthens.

Dollar strength is weakening the US economy, because American manufacturers cannot compete abroad nor can they compete against importers selling into the USA.

Imports far outpace American exports.  The article quoted Ian Shepherdson, chief economist at Pantheon Macroeconomics, “It’s so far off the wall, it can’t possibly happen again. Exporters are struggling.”

The key to good value investing is to invest on the future and sell to the thundering herd.  Much of the world has been investing in the US dollar, so it is time to use these strong dollars and accumulate good investments in other currencies.

Reduced foreign trade becomes a drag on the economy and the strong greenback is just one economic pitfall for the USA.  The senate handed President Obama a delay on the Asian trade agreement with 11 Asian nations.

The 11 countries involved are some of the fastest-growing economies in the world and create over a third of the the world’s output and a quarter of its goods and service exports.

Such gaps cannot continue. Eventually market forces would balance trade.  Government intervention is more likely to take place first.

The dollar strength today is very similar to 1980 when over a five year period it appreciated and lost 50% against all major currencies. This hurt American businesses and created a rising trade gap in the same way it is now.

Representatives from the governments of Japanese, Germany, France and Britain, met at the Plaza Hotel in New York and agreed to devalue the dollar to make U.S. exports cheaper so other countries could buy more American-made goods and services.

The devaluation was orderly and the dollar exchange rate  versus the yen and other major currencies declined by 51% from 1985 to 1987.

Should this happen again, investment in the Euro can gain as much as a 50% profit boost.

Because markets move faster today than in the 1980s and because the private investing sector has more clout in currency markets than three decades ago, the dollar’s fall could be far more rapid then in the 1980s.

This is why my report “Three Currency Patterns For 50% Profits or More.” described below recommends investing in good value European equities on a systematic basis.

The report shows 22 good value investments and a really powerful tactic to use that allows you to accumulate these bargains now even in very small amounts (even $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

Order the report here $29.95

Gary

International Value Markets


Here is an update on international value markets.

The global economy is in tension as the US and Western European economies battle between inflation and deflation.

Who will win out?  Will costs rise or will they fall?  Whichever way events emerge, the best way to protect against loss is by always seeking value.

Value holds a special place for investors and business people… local or global because spotting value is another way of finding distortions.  Distortions are vacuums and nature abhors a vacuum.  Imbalances will always correct themselves. To have success in investing or business… one simply has to spot good value.

Understanding value is the tricky part.

This is why once a quarter we look at a major equity market valuation analysis by Michael Keppler.

If you are a new multi currency subscriber learn about Keppler Asset Management here.

Here are Keppler’s Comments on Major Market Value for this quarter.

After the first correction since March 2009 in the second quarter 2010, Global equities have resumed their upward trend in the third quarter.

The Morgan Stanley Capital International (MSCI) World Total Return Index (with net dividends reinvested, December 1969 = 100) advanced 9.3 % in local currencies, 13.8 % in US dollars and 2.1 % in Euros.

Year to date, the MSCI World Index gained 1.6 % in local currencies, 2.6 % in US dollars and 7.8 % in Euros.

The Euro had a strong comeback in the third quarter. It soared to 1.3652 versus the US dollar, up 11.5 % from its end-of-June level but still 4.8 % shy of 1.4348 — the level at which it stood at the end of 2009.

Twenty-two markets advanced in the third quarter and two markets declined.

Hong Kong (+21.5 %), Norway  (+16.5 %) and Austria (+15.1 %) performed best.

Ireland (-13.5 %), Japan (-0.1 %) and Switzerland (+2.6 %) came in at the bottom.

Year-to-date, thirteen markets are up and eleven markets are down.

The best performing markets in the first nine months of 2010 were Denmark (+28.5 %), Hong Kong (+17.7 %) and Sweden (+17.4 %).

Greece (-35.5 %), Ireland (-19.2 %) and Spain (-10.1 %) performed worst year-to-date.

Performance numbers are in local currencies unless mentioned otherwise.

The Top Value Model Portfolio currently contains the following six “buy” rated countries at equal weights:

Austria, France, Germany, Italy, Singapore and the United Kingdom. Our current ratings suggest that a combination of these markets offers the highest expectation of long-term risk-adjusted returns.

As the chart below indicates, our implicit three-to-five-year projection for the average annual gain of the Equally-Weighted World Index now stands at 14.1 % slightly below our estimate of 14.3 % published here three months ago in our “Summer 2010 Quarterly”.

Given the 9.2 % appreciation of the Equally Weighted World Index in the third quarter, it is remarkable that our return estimates did not come down more.  The reason is fundamentals  have been improving throughout the year. Compared with their end of 2009 levels — which may have marked the bottom of the cycle — the 12-month trailing earnings and cash flows for the average equity market covered here are up 63.5 % and 24.7 %, respectively. In addition, the low interest rate environment continues to make stocks look  attractive.

keppler-chart

Keppler also shows major markets which he believes to be least statistically likely to appreciate.

SELL CANDIDATES

Belgium

Canada

Denmark

Hong Kong

Sweden

Switzerland

U.S.A.

NEUTRALLY RATED MARKETS

Australia

Finland

Greece

Ireland

Israel

Japan

Netherlands

New Zealand

Norway

Portugal

Spain

Through good times and bad… through inflation… deflation and steady economies value rises above all.  We can never know for sure what will happen next… but we can know that when we find value our chances of a good return rise.

On the subject of value see news about real estate investing by one of the richest men in Ecuador here.

mindo

Gary

Learn about my two reports on how to find value here.

Belong to the International Club

Who Gets the 36 Cents?

 

I wonder.   Who does the government owe 36 cents?

According to Treasurydirect.com, as of October 31, 2017 the cost of interest on  the total US public debt of $20,467,375,664,755.32 (20 trillion+) was $24,411,569,716.36 (24 billion+).

The 36 cents isn’t much of a problem.  The other 20 trillion is.

This is good news and bad… the rock and the hard spot.  The bad news is that the rock (US federal debt) is getting bigger….harder to miss.  The Congressional Budget Office (CBO) projected in 2010 (the debt then was a bit over 14 trillion) that, under law at that time, debt held by the public would exceed $16 trillion by 2020, reaching nearly 70 percent of GDP.

They sure goofed on that.  Here we are… not quite into 2018 and debt has shot past 20 trillion.

How could the CBO be so wrong? 

The CBO screwed up because they could never imagine that the Fed would push interest rates so low… and keep them there.  The interest rates are so low that the government can borrow and borrow and still afford the interest.

For example, US Federal government interest this year will amount to around $483 billion on the 20 trillion of debt.  Yet in 2008 on debt of only $9,229,172,659,218.31 (9 trillion +) the interest that year was $451,154,049,950.63 (451 billion +).

Interest payments in 2017 are 7% higher than they were in 2008.  Yet the debt is over 100% higher.  

Very low interest rates have helped the government borrow.  Low interest has also helped the US stocks reach all time high prices.

Here is the very hard spot.  The downside is that low interest has reduced earnings of investors.  Low interest has ruined the lifestyles of many who have retired.

Here is what happened and why the problem may exist for quite a bit longer.

If investors can increase the interest rate to 6% from the lousy 1% (or so) they earn now, they gain 1,263% more over 30 years.  Anyone living off interest, who is drawing down their portfolio over 20 years, makes 57% more annual income every year.

But if investors get 6% interest instead of 1%, the government has to also pay more on it debt.

The government will resist raising rates because it will ruin their budget, cause a collapse of the stock markets and destroy the US dollar.  

Rising interest rates, that we would like to see as investors, will create an almost unimaginable debt crisis.  If government interest goes to 6% it is like the $20+ trillion national debt  rising to 100 trillion!  Unless there are some huge tax increases, a 5% increase in interest rates would increase the national debt by five times.

A tax increase?  The current tax act being proposed reduces, not increases, revenue.

This is not a theoretical problem for the future. This is not something that our children and grandchildren will have to deal with.  This is a problem in the here and now.

Interest rates create a massive problem on two sides of the same coin.  Raise rates the massive national debts ruins the purchasing power of currencies.  Keep interest rates low and capitalism does not work for investors.  Politicians simply borrow more (on our behalf) but for their benefit.

Learn how to have more freedom and time, less stress, better health care, extra income, greater safety and profit in your savings despite America’s deficits, debt and currency risk.

Fortunately there are secrets that will allow a few to live much better, free of debt and worry despite the decline in the dollar’s purchasing power.   My wife, Merri and I, have traveled, lived, worked and invested around the world for nearly 50 years to gain this information.

Let me share the basics of this data and how we can be of help through 2018.

The first fact behind this secret is that things are really good in the western world.  Despite many problems, we are surrounded by more abundance and greater opportunity than almost anyone has ever enjoyed, anywhere, ever.   To enjoy a fair share of this wealth, all we have to do is understand human nature and learn how to invest in the new economy, as it changes and becomes new, again and again.

Merri and I have made seven huge transitions in the 50 years.  Each has allowed us to always stay ahead of losses that the majority of Americans suffer.  We are in another transition right now and want to share why and what to do so you can stay ahead and live a richer, independent life through 2018 and beyond.

A falling US dollar is one of the greatest risks we have to our independence, safety, health, and wealth, but also brings a window of huge profit as I explain below.   Though the greenback has been strong for a number of years, its strength is in serious jeopardy.  The growing federal deficits increase the national debt and this with rising interest rates propels a growing debt service.

When the Dow Jones Industrial Average recently passed 20,000, another milestone of “20” took place that has a much darker meaning to your and my spending power.  The U.S. national debt passed the $20 trillion mark.

The problem is that the Dow will come back down.  National debt will not fall.

The double shock of money fleeing Wall Street and US debt skyrocketing, will destroy the purchasing power of the greenback.

Go to the store even now.  Statistics say inflation is low, but buy some bread or, heaven forbid, some fresh vegetables like peppers or fruit.   Look at the cost of your prescription or hospital bills.  Do something simple like have your car serviced at an auto dealer.  Look at the dollars you spend and you’ll see what I mean.

The loss of the dollar’s purchasing power erodes our independence, our freedom and our savings and wealth as well. 

At the same time, low interest rates by big banks and higher health care costs soak up the ever diminishing income and savings we have left.  According to a Gallup poll, the most unpopular three institutions in America are big corporations & Wall Street banks, HMOs and Congress.

Yet there is little we can do because these institutions are in control.

Over the last 50 years the average income for 90 percent of the American population fell.  Our health system is restricted by a Kafka-esque maze of legislation and insurance regulations that delay, frustrate, and thwart attempts by patients and doctors from proper medical care.  Big banks and corporations restrict our freedom of choice.  The business customer relationships are no longer transactions between free equals.

Banks can trap us in indebtedness at every age from student loans to mortgages to health care costs.  They pay almost nothing on our savings.  They hide unexpected fees and payments in complex and unreadable documents.  Banks and big corporations routinely conceal vital information in small print and then cheat.  Weak regulations and lax enforcement leave consumers with few ways to fight back.  Many of these businesses ranging from cable TV to phone and internet service to health insurance have virtual monopolies that along with deceptive marketing destroys any form of free market.

These same companies control the credit-scoring agencies so if  we don’t pay unfair fees, our credit scores will plunge and we could lose the ability to borrow money, rent an apartment, even to get a job.  Many consumers are forced to accept “arbitration clauses” in lieu of  legal rights.  The alternative is to lose banking, power, and communication services.

Big business has also usurped our privacy.  Internet companies sell our personal data.  Personal information is pulled from WiFi and iPhones track and store our movements.  The government can access this information, sometimes without subpoenas.  There’s a lot that we don’t know, often withheld under the guise of “National Security.”

The glow on Western democratic capitalism has dimmed… or so it seems.  The US, leading the way, is still a superpower with economic, innovation and military might, but the institutions that should serve the people have become flawed or broken.

America’s infrastructure is in shambles.  The nation’s bridges are crumbling, many water systems are filled with toxins, yet instead of spending more to fix this, we build more prisons.  The 2.2 million people currently in  jail is a 500 percent increase over the past thirty years.  60% of the inmates belong to ethnic groups.  Not just non-white ethnic groups are suffering.  Annual death rates are falling for every group except for middle-aged white Americans.  Death rates are rising among this group driven by an epidemic of suicides and afflictions stemming from substance abuse, alcoholic liver disease and overdoses of heroin and prescription opioids.

America’s middle class is shrinking.  Nearly  half of America’s income goes to upper-income households now.  In 1970 only 29 percent went to this group.  How can we regain our freedom, our happiness and our well being in such a world?

What can we do?

Gain a better, freer life is to combine better health, higher income and greater savings for a happier, more resilient lifestyle. 

Merri and I will celebrate our 50th year of global living, working, investing and researching to find and share ideas on how to have simpler, low stress, healthier, more affluent lifestyles.  Our courses, reports and email messages look at ways to gain:

#1:  Global micro business income.

#2:  Low cost, natural health.

#3:  Safer, more profitable, investments that take little time or cost to buy and hold… so you can focus on earning more instead

Many readers use our services for just one of these three benefits.  They focus only on health or on earning more or on better, easier investing.

27 years ago Merri and I created the International Club as a way for readers to join us and be immersed in all three of these benefits.   The International Club is a year long learning program aimed at helping members earn worry free income, have better affordable good health and gain extra safety and profits with value investments.

Join us for all of 2018 NOW.

The three disciplines, earning, health and investing, work best when coordinated together.  Regretfully the attacks on our freedom are realities of life.  There is little we can do to change this big picture.  However we can change how we care for our health, how we earn and how we save so that we are among the few who live better despite the dollar’s fall.

We start with better lower cost health care.

Club membership begins by sharing ways to be free of the “Secret Hospital Charge Master”.   Just as governments hide truth behind “National Security”, big health care businesses hide medical truths behind “Charge masters”.  Most hospital charge masters are secret because big business does not want us to know how much hospital costs have risen.  Motivations beyond our good health, like corporate greed, want to keep us in the dark about health care cost.

Despite rising health care costs, a report from the Centers for Disease Control & Prevention shows that hospitals are the last place we want to be for good health.  One report shows that hospital-acquired infections alone kills 57% more Americans every year than all car accidents and falls put together.

Often, what patients catch in the hospital can be worse than what sent them there.  Governments and health care agencies agree  – antibiotic resistance is a “nightmare.”  An antibiotic-resistant bacteria may be spreading in more hospitals than patients know.  About one in every 25 hospitalized patients gets an infection and a 2013 report from the Journal of Patient Safety showed that medical errors are the third-leading cause of death in the country.

Along with the risk of hospital acquired illness and medical errors, the second huge threat to our well being… is health care costs, especially at hospitals.  This is why charge masters are so often secret.  There are few risks to our wealth that are greater than a hospital stay.

I have created three natural health reports are about:

#1: Nutrition

#2: Purification

#3: Exercise

Each report is available for $19.95.  However you’ll receive this free as club member and save $59.85.

Club members also receive seven workshops and courses on how earn everywhere with at home micro businesses.  We call this our “Live Well and Free Anywhere Program”.   The program contains a series of courses and reports that show ways to earn and be free. These courses and reports are:

  • “International Business Made EZ”
  • “Self Fulfilled – How to Write to Sell”
  • Video Workshop by our webmaster David Cross,
  • The entire weekend “Writer’s Camp” in MP3
  • The report “How to Raise Money Abroad”
  • Report and MP3 Workshop “How to Gain Added Success With Relaxed Concentration”
  • The course “Event-Full – How to Earn Conducting Seminars and Tours”

This program is offered at $299, but is available to you as a club member free.  You save $299 more.

Next, club members participate in an intensive program called the Purposeful investing Course (Pi).  The purpose of Pi is finding value investments that increase safety and profit.  Learn Slow, Worry Free, Good Value Investing.

Stress, worry and fear are three of an investor’s worst enemies.  These destroyers of wealth can create a Behavior Gap, that causes investors to underperform in any market good or bad.  The behavior gap is created by natural human responses to fear.  Pi helps create profitable strategies that avoid losses from this gap.

Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio.  There are no secrets about this portfolio except that it ignores the stories from economic news (often created by someone with vested interests) and is based mainly on good math that reveals the truth through financial news.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).

There are seven layers of tactics in the Pi strategy.

Pi Tactic #1: Determine purpose and good value.

Pi Tactic #2: Diversify 70% to 80% of portfolio equally in good value developed markets.

Pi Tactic #3: Invest 20% to 30% equally in good value emerging markets.

Pi Tactic  #4:  Use trending algorithms to buy sell or hold these markets.

Pi Tactic  #5:  Add spice speculating with ideal conditions.

Pi Tactic  #6: Add spice speculating with leverage.

Pi Tactic  #7:  Add spice speculating with forex potential.

The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:

#1:  Current book to price

#2:  Cash flow to price

#3:  Earnings to price

#4:  Average dividend yield

#5:  Return on equity

#6:  Cash flow return

#7:  Market history

We combine the research of several brilliant mathematicians and money managers with my years of investing experience.

This is a complete and continual study of what to do about the movement of international major and emerging stock markets.  I want to share this study throughout the next year with you.

This analysis forms the basis of a Good Value Stock Market Strategy.  The analysis is rational, mathematical and does not worry about short term ups and downs.  This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

The costs are low and this type of ETF is one of the hardest for institutions to cheat.  Expense ratios for most ETFs are lower than those of the average mutual fund.  Little knowledge, time, management or guesswork are required.  The investment is simply a diversified portfolio of good value indices.  Investments in an index are like investments in all the shares of a good value market.

Pi opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.

The Pi subscription is normally $299 per annum but as a club member you receive Pi at no charge and save an additional $299.

Profit from the US dollar’s fall.

In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

Club members receive a report about opportunity in the  current strength of the US dollar is a second remarkable similarity to 30 years ago.   The dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  The trends are so clear that I created a short, but powerful report “Three Currency Patterns for 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but when you become a club member you receive the report, “Three Currency Patterns For 50% Profits or More” FREE.

Plus get the $39.99 report, “The Silver Dip 2017” free.

With investors watching global stock markets bounce up and down, many missed two really important profit generating events.  The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV).   The second event is that the silver gold ratio hit 80 and has remained near this level, compared to a range of the 230s only two years ago.

These two events are a strong sign to invest in precious metals.

I prepared a special report “Silver Dip 2015” and updated this in 2017.   The report explains the exact conditions you need to make leveraged silver & gold speculations that can increase the returns in a safe portfolio by as much as eight times.  The purpose of the report is to share long term lessons about speculating in precious metals gained through 30 years of speculating and investing in gold and silver.

The low price of silver offers special value now so I want to send you this report because the “Silver Dip 2017” offers enormous profit potential in 2017.

The report “Silver Dip 2017” sells for $39.95 but club members receive it free as well.

The $39.95 new “Live Anywhere – Earn Everywhere Report” is also free.

There is an incredible new economy that’s opening for those who know what to do.  There are great new opportunities and many of them offer enormous income potential but also work well in disaster scenarios.

There are are specific places where you can reduce your living expenses and easily increase your income.  Scientific research has shown that being in such places actually make you smarter and healthier.  Top this off with the fact that they provide tax benefits as well and you have to ask, “Where are these places?”.

Learn about these specific places.  More important learn what makes them special.  Discover seven freedom producing steps that you can use to find other similar places of opportunity.

The report includes a tax and career plan broken into four age groups, before you finish school, from age 25 to 50 – age 50-to 65 and what to do when you reach the age where tradition wants you to re-tire.  (Another clue-you do not need to retire and probably should not!)

The report is very specific because it describes what Merri and I, our children and even my sister and thousands of our readers have done and are doing, right now.

Live Anywhere – Earn Everywhere focuses on a system that takes advantage of living in Smalltown USA, but earning locally and globally.

This report is available online for $39.99 but International Club members receive it free.

Save $418.78… “plus more” when you become a club member.

Join the International Club and receive:

#1: The $299 Personal investing Course (Pi).   Free.

#2: The $299 “Live Well and Free Anywhere Program”. Free.

#3: The $29.95 report “Three Currency Patterns For 50% Profits or More”. Free.

#4: The $39.99 report “Silver Dip 2017”. Free

#5: The three $19.99 reports “Shamanic Natural Health”.  All three free.

#6: The $39.99 “Live Anywhere – Earn Everywhere” report. Free.

#7: A subscription to the Purposeful investing course… Plus more.

These reports, courses and programs would cost $767.78 so the 2018 membership saves $418.78, “plus more”.

What’s the “plus more”?

Join the International Club for $349 and receive all the above online now, plus any online reports, online course updates or online programs we create throughout 2017 all at no additional fee. The club membership entitled you to everything.

The International Club membership is $499, but we want to encourage our first 100 members for 2018 to join quickly so we are currently accepting discounted membership at $349. 

Join the International Club for $349 and receive all the above online now, plus all reports, course updates and Pi lessons through the rest of 2017 and all of 2018 at no additional fee.

Click here to become a member at the discounted rate of $349

Gary 

Global Multi Currency Economic Update


Here is a global multi currency economic update.

See below why I show this chart again and again.

The biggest of the seven trends I have cashed in on over the past 42 years has been the declining US dollar.  This chart of the greenback’s fate from the Grandfather Economic Report says it all. The buck has collapsed over the decades and anyone who has bet against it, as I have has reaped a fortune, except…

multi-currency-chart

at our June North Carolina Quantum Wealth seminar we saw how sometimes such as from 1979 to 1985 the US dollar was strong. Speculators who just bet against the buck were bucked out of the profit zone.  Anyone who shorted the dollar… long term… in 1979 had to wait until about 1987 before they saw  it drop below the 1979 level.  So we cannot just randomly bet against the dollar and expect automatic profits.

There are risks to betting against the US dollar as speculators are seeing now.

This is why at the Quantum Wealth course, I outlined seven places to invest now.

Only one of these might include speculating against the US dollar, which is #1:  Multi Currency Interest Spreads.

#1: Multi Currency Interest Spreads
#2: Value Markets
#3: Emerging Markets
#4: Wellness
#5: Water Alternate Energy
#6: Truth & Cohesion
#7: Real Estate

There are several ways to speculate against the greenback.  Personally I use the multi currency sandwich. I borrow dollars at low interest rates and invest the funds on dollar related currencies…. currently the New Zealand, Canadian, Australian dollars and Mexican peso.

This is a slow, partly hedged speculation versus the dollar… but forex profits are not my main goal.   The interest differential is what assures my profit… if I can wait for the dollar to drop.  My loan cost on dollar loans is currently below 3%.   My average yield is 6.31% so I am paid about 3.31% to borrow the dollar.

Here is an example of how this works.

100K ea. MXN BONOS  10% Due 2024 117  = 8%
EUR INVT BNK AUD 6.0 2013 101.49  5.56%
EUR INVT BNK NZD 6.5 2014 104.77  5.38%

Average 6.31%  + $18,930

Loan cost      $   9,000

Return           $   9,930

Plus Forex Potential

There is some new bad news to this for US investors.  Regulations on overseas banks by the US have become so extensive that many non US banks will no longer accept Americans.  Even Jyske Global Asset Management has had to increased its minimum account for advisory clients to $ 1 million.
The news is not all bad.  Non Americans can still use this technique and Americans can also borrow low and deposit high IF they let JGAM make the portfolio decisions.

To help US investors, JGAM provide managed portfolios with a $100,000 account minimum ($200,000 if they want loans). This is compared to the minimum of 150,000 euro required for non US investors to start.

In either case these minimums are among the lowest for investment banks.

To get complete details, US investors should contact Thomas Fischer at fischer@jgam.com

Non US investors should contact Rene Mathys  at mathys@jbpb.dk

Investors with smaller amounts can best diversify through ETFs and Investment Trusts on the US and UK stock exchanges.

There is some other really good news though that we looked at in our June Quantum Wealth course.

The key to borrowing low and depositing high is to find strong currencies… with low interest rates… when their strength is not supported by economic fundamentals. Right now three currencies are in this state… the US dollar, the Swiss franc and the Japanese yen.

Jyske and JGAM (and I ) are taking advantage of this fact in their managed and discretionary portfolios.

Lars Stouge, the President of JGAM, recently sent me a full analysis of the US dollar and I have copied it here for you… so you can see why the current US dollar strength creates unusual opportunity.

Analysis on USD/EUR

14 June 2010 By Lars Stouge

Summary

Historically the US dollar (USD) has shown a down-trend against first the German D-Mark (DEM) and later the euro (EUR), periodically interrupted by significant appreciations. However, lately the USD has strengthened again moving close to its fair value. Relative prices, real bond yields and yield curve differences between the US and the eurozone explain to some extent movements in the USD.

If the business cycle in the US moves further ahead of the eurozone, it is likely that real bond yield spreads and yield curve differences will become even more favorable for US securities, increasing the demand for the USD.

History

In 1972 the Bretton Wood system was abandoned and the USD became a free floating currency against most major currencies including the DEM. In 1999 the DEM was substituted by the EUR when a single currency area was created in Europe, the eurozone.

The graph below shows the development in the USD since 1970 against first the DEM and later (since 1999) against the EUR, indexed with 1972 at 100. The graph slopes downwards with a total loss in the value of the USD of almost 60%. However, the down-trend was interrupted by large movements up in both 1980-85 and 1995-2001.

multi-currency-update

Purchasing power

The Purchasing Power Parity (PPP) theory explains the long trend development in the USD. As prices in the US have risen more than in Germany and the eurozone, the US has lost purchasing power and therefore, the USD has fallen in value to compensate for the loss in the US competitive position.  

multi-currency-update
The graph shows how well the estimated1 PPP explains the downward slope in the USD. When the USD index moves above the PPP-line, the USD is overvalued (i.e. too expensive compared to relative prices) and when the USD moves below the PPP-line, the USD is undervalued. At the present price level of approximately 1.20 USD per EUR we are close to parity, i.e. at fair value.

In the graph below we have taken out the PPP component of the USD by measuring the USD-index relative to the estimated PPP. The graph shows that in 1972, 1981-1986 and again in 1999-2002 the USD was overvalued. The rest of the period the USD was undervalued.
multi-currency-update

Estimated by use of simple linear regression.

Interest rates and bond yields

The deviation from PPP could be caused by spreads in (real) interest rates and (real) bond yields. When investors expect a yield or interest rate pickup on a currency, they will invest until expectations of future depreciation correspond to the yield or interest rate difference (this is called the Interest Rate Parity, IRP). Until the level of IRP has been reached investors will buy the currency with the high (real) yield or interest rate and the currency
increases in value.

We have examined how short interest rate spreads and long bond yield spreads, both in nominal and real (i.e. inflation adjusted) terms, correlate with the PPP deviation of the USD. To cut it short, the analysis shows that the real bond yield spread best explains the development. The graph is shown below. For example the overshooting USD in the beginning of the 1980’s is explained by the real bond yield spread in favor of the USD.

Other considerations

However, the model has its limitations. As can be seen from the last graph not all USD movements around its PPP value is explained by the real bond yield spread. For example in the beginning of the 1990’s the USD continued to depreciate to become more undervalued despite a favorable movement in the real yield spread.

Also, when the USD became overvalued up to and after year 2000 it happened without a movement in the real yield spread. There are several reasons why the model has its limitations as explained in the following.

One reason is that many other factors than the real yield spread influence a currency. Relative growth, productivity, balance of trade and payments, debt burdens and a number of other factors determines the price of a currency. However, many of the factors not considered directly in our model do indirectly have an influence, as these factors also determine relative price levels, inflation, interest rates and bond yields. Therefore, indirectly our model captures other determining factors.
multi-currency-update
Another reason why the model has its limitations is that the price of a currency today is determined by investors expectations of future real bond yields and other possible determining factors. In our simple analysis we have used actual price levels and bond yields. It is difficult to measure or estimate market expectations and only if markets are efficient and investors are rational (i.e. never make mistakes) then expectations will be fulfilled.

To sum up, one should be careful not to rely too much on a simple model as the one presented in this memo. However, even more sophisticated models also lack prediction power.  Actually, in the very short run (days and weeks) analysis prove that the best prediction in the currency market is to flip a coin.

Yield curves

The aspect of expectations can to some extend be modeled by examining yield curves. A yield curve reflects the markets expectations of future interest rates. E.g. if the long bond yield is higher than the short interest rate it is an indication that investors expect short term interest rates to rise. Therefore, by comparing yield curves we get a measure of which currency should expect to see the largest rise in interest rates. The graph below shows the yield curve difference between the US and the eurozone plotted against the USD’s deviation from PPP.

Except from the period 1991-93 where the yield curve in the US versus the eurozone formed a temporary peak, the yield curve difference explains well the development in USD’s deviation from Purchasing Power Parity.

Conclusion

In 2010 the USD has strengthened to a fair value against the EUR close to 1.20 USD per EUR. We assess that the USD could become even stronger and become overvalued. This could happen if the US economy continues to move ahead of the eurozone and cause the real bond yield and the yield curve in the US to distance itself even further from the eurozone.

Short term free floating currencies move like a random walk making today’s price the best prediction of tomorrow’s price.


multi-currency-update

However, we warn against using the simple model presented in this memo as a prediction tool. The prime
purpose of the model is to evaluate if the USD is over, under or fair valued.

The phrase that jumps at me in this analysis is:

Actually, in the very short run (days and weeks) analysis prove that the best prediction in the currency market is to flip a coin.

Fundamentals and value rule the direction of currency parities.  Human emotions rule the swing of currencies as parities become overbought and or oversold.  When you can be paid to borrow a currency that has become strong but is not supported by fundamentals (like borrowing the Swiss franc, Japanese yen or US dollar to invest in higher yielding currencies) you can take advantage of these human emotional errors.  

Join Merri and me with Thomas Fischer in Copenhagen this August or next October in North Carolina when we will update our portfolio positions.

The strong US dollar makes this the year to enjoy Europe and Thomas Fischer at Jyske just sent me this note: Gary due to the increasing US dollar, the cost for our August seminar in Copenhagen for Americans has dropped from about $2,050 to $1,700, a 15% discount. (THE COST INCLUDES MOST OF THE FOOD, TRIPS, MAKING THE CONFERENCE A GREAT BARGAIN.)

I love attending these seminars because of the great speakers.

This year speakers include will be Bjorn Lomborg known as the “Skeptical Environmentalist.”  See more on Lomborg here.

Another speaker will be Jeff Rubin. Rubin was the Chief Economist for CIBC, a North American investment bank for 20 years. See more about Rubin here.

Kenneth Rogoff  the Thomas D. Cabot Professor of Public Policy and Professor of Economics at Harvard University and former Chief Economist for the International Monetary Fund is also a speaker. See more at Rogoff.

Because updating multi currency strategies is so important in today’s investing world, another speaker is Daniel Brehon, the foreign exchange strategist, for Deutsche Bank AG. Deutche Bank is Germany’s largest bank and one of the laregst banks in the world with 1,999 branches situated in 70 countries.  The bank has significant regional diversification and substantial revenue streams from all the major regions of the world.

They have established strong bases in all major emerging markets, and therefore have good prospects for business growth in fast-growing economies, including the Asia-Pacific region, Central and Eastern Europe, and Latin America.

In Europe, Deutche Bank is well placed to benefit from resilient conditions in Europe and Germany in the euro zone.  The bank began in the 1870s and now employs more than 80,000 people in 72 countries, and has a large presence in Europe, the Americas, Asia Pacific and the emerging markets.

Deutsche Bank has offices in major financial centers including New York, London, Frankfurt, Paris, Moscow, Amsterdam, Toronto, São Paulo, Singapore, Hong Kong, Tokyo and Sydney. Furthermore, the bank is investing in expanding markets, such as the Middle East, Latin America, Central & Eastern Europe and Asia Pacific.

See details on how to join Merri and me at Jyske’s bi annual Copenhagen seminar here Global Wealth Management Seminar.

Some great things about the Copenhagen conference are the seminar of course…then there’s the stunning food and the wonderful visits included…This package includes:  accommodation at the Copenhagen Marriott Hotel for four nights, (25-28 August) including breakfast,  Reception and dinner at the bank’s Copenhagen offices, seminar fee and materials for the seminar sessions on Thursday, Friday and Saturday. full lunches on Thursday, Friday and Saturday, canal & harbour tour on Friday in the late afternoon, four-course gala dinner with entertainment and dancing on Saturday evening, and a Sunday excursion including lunch.

Merri and I always go on the excursion also to Silkebord with a drive out into the country, lovely food, picnic cruise and a chance to see the main office and the trading center.  This is always our most interesting, favorite and delightful conference…and we hope you will join us there!  We love the stroll along the harbor, the fresh air, wonderful meals and interesting people from all over the world.

Gary

See Ecuador real estate for sale at the Ecuador MLS

How We Can Serve You

How to Make Money in the Multi Currency Era


The US and Ecuador property market offers a rare opportunity to make money in this multi currency era. Here is an excerpt from a recent multi currency update.

Two economic forces have come together to create extra special profits.

I know because the same  combination occurred in London during the late 1970s and allowed me to increase an investment eleven times in two years by buying property then.

Earlier in 1970 I had lived in London, England for a year, then moved to Hong Kong. During that time I also maintained a home outside of San Francisco, California.

This was a time of great inflation. My homes in California and in Hong Kong appreciated greatly. In the mid 1970s, when I moved from Hong Kong back to London, I noticed that London real estate was priced about the same as it had been in 1970. This puzzled me. Why had London property prices remained flat despite inflation?

On investigation, I learned that there had been a huge real estate crash in 1970 which continued to dampen real estate prices six years later despite the rampant global inflation. I felt this was a great distortion as European property prices had risen, but London prices had not. Yet London offered the best utility as the center of the English speaking world. This, to my way of thinking, created a huge distortion.

It’s late 1976. Britain faced  a sterling crisis. In less than two years the pound has fallen from $2.40 to $1.60. Investors had no faith in the British economy, or the government that ran it. The government’s budget was a mess.  Investors  were ditching the pound.

The plummeting pound pushed the economy to breaking point. Prime Minister Callaghan, in desperation borrowed as much as possible, £2.3 billion from the IMF.

At that time, the British pound collapsed to its lowest level ever (a pound per dollar for a short time) so the distortion widened. This meant in US dollar terms London property had dropped almost 50% while property in other major cities of the western world had increased in price by three or four times.

london-house

The house I bought was right next door and very similar to this house in Bedford Park, London W4.

This house in West London was 34,000 pounds, 9,000 pounds down (then $9,000).   I took a mortgage for 25,000 pounds ($25,000).  I lived in the house and three years later the pound had recovered to 2.2 dollars per pound plus London real estate had caught up with property in other major western centers. I sold the house for 115,000 pounds or $253,000 a profit of $244,000 on a $9,000 investment.

Now it’s the US dollar that is very low.

You will have seen articles something like the the September 7, 2009 Bloomberg article “Weak Dollar? Currency, at 10-Year Low, May Fall More” by Bo Nielsen.

An excerpt says: Anyone who says the dollar is weak after it fetched a record-low $1.3681 against the euro and the fewest pence against the pound in 25 years is expressing a euphemism.

The currency may decline at least another 10 percent by the end of 2008, say Jay Bryson, an economist at Wachovia Corp., and Kenneth Rogoff, the former chief economist at the International Monetary Fund. The dollar has only fallen 3.4 percent in the past two years to a 10-year low, according to a Federal Reserve index that weighs trade with 38 countries including China, Mexico, Canada and countries in Europe. It tumbled 30 percent in the three years ended 1988.

“Dollar weakness will be broad-based and could last for years,” said Bryson, a global economist at Charlotte, North Carolina-based Wachovia who previously analyzed currencies at the Federal Reserve.

Investors are dumping dollars, lured by higher returns elsewhere. The U.S. will grow more slowly than Europe for the first time since 2001 and Japan for the first time in 16 years, the IMF forecasts. The difference in yield between 10-year German bonds and Treasuries has shrunk to the smallest since 2004.

Those who read this site regularly or subscribe to our multi currency course know that I reported my personal portfolio and recommended getting out of the US dollar in February 2009. See that recommendation here.

I showed that my portfolio was 86% out of the greenback.

My liquid portfolio currency allocation was reported as Brazilian real  4%,
 Denmark kroner  33%
,  euro 31%
, British pound 10%
, Turkey lira 8%
, US$ 14%.

I also mentioned in February that I was going to start buying Florida real estate.

So Merri and I began looking and in our research found that there appears to be a hole in the market for Central Florida property selling in the million to $750,000 range.  There seems to be no buyers at all. We have been watching prices tumble hundreds of thousands.

We are viewing one property next week that started at $800K+. It just dropped $100,000 last week from $395,000 and is now down to $295,000.

This is about a 25% drop in that house’s price in six months. That’s pretty good!

Now look at what this means in depreciated dollar terms.

dollar-chart

Here is a chart of the euro to US dollar from yahoo.finance.com from February 2009 to September 10, 2009 when this was written.

In February a US dollar bought .80 euro so that house at $395,ooo cost 319,200 euro.  Now a US dollar buys about .68 euro so this house at $295,000 costs about 200,000 euro.

That is a drop in that house price of 37% in six months in terms of euro. That’s even better!

Here is the magic in this hidden, built-in profit.  For most of the market, the profit is hidden.  Most investors are not comparing currencies and real estate prices.  Yet these distortions will filter through. Eventually European investors…. or those like me who are holding currencies other than dollars will see this distortion and cash in.

I, and now you, just have an advantage because we are always looking at both markets… currency and real estate.

Ecuador Real Estate Cheaper as Well

This also creates better value on Ecuador real estate. Take for example one penthouse property I am selling at $139,000.

This is a perfect property for those who want peace… quiet…and instant access to miles of empty, warm Pacific beach.

ecuador beach rentals

This two room, top floor penthouse is at Palmazul and includes use of the the swimming pool, tennis courts… and spa.   You can dine here, one floor below.

ecuador beach rentals

The units are fully equipped… kitchen…

Ecuador beach rentals

with full size fridge.

Living room…

Ecuador beach rentals with a view…

Ecuador beach rentals leading…

Ecuador beach rentals to large private balconies…

Ecuador beach rentals with these views…

ecuador beach rentals

and sunsets to kill for.

ecuador beach rentals

Long walks on the beach… you can amble at low tide for ten miles and not see a soul.

ecuador-seminars

Luxury bathrooms with bathtub…

Ecuador beach rentals

and a king size bed with view and caressed by the ocean breeze.

Ecuador beach rentals

This unit would have cost 111,000 euro in February. Now the price has dropped to 94,500 euro… just from the dollar’s fall.

The US and Ecuador property markets offers a rare opportunity to make extra profit now because of hidden added value from the US dollar’s fall. History suggests that real estate is a real asset so its price rises as the currency its counted in falls.

These corrections take time because most property owners do not calculate their property in multi currency terms.  Those of us who watch this can gain extra profit now.

The article above is an excerpt from a recent Multi Currency update. Learn more about multi currency investing. Subscribe to our multi currency course.

Gary

The greatest asset of all is the ability to earn globally in many currencies.

This is why we are providing a special three for one offer with our  course Tangled Web… How to Have an Internet Business. This can help you create your own internet business.

Our emailed course “Tangled Webs We Weave – How to Have Your Own Web Based Business” is a continuing educational program.  You receive the first 28 lessons when you enroll and a new lesson every week or two.

This course teaches how to create a web based business and is developed from the ongoing experiences that we have from our successful and profitable internet business.

This course is well worth the enrollment fee of $299… but currently you also receive two additional courses FREE.

The other two courses are #1: International Business Made EZ, and #2: Self Fulfilled – How to be a Self Publisher.

These two courses have sold for $398 and thousands have paid this price. We add them to your course at no added cost as I believe they will help you develop a better business in these crucial times.

Even Better Get All three Courses Free

To make this offer even more compelling,  I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November all three courses, “Tangled Web… How to Have an Internet Business Course,”  “Self Fulfilled- How to be a Self Publisher” and “International Business Made EZ” free.

Join us with Jyske Bank and my webmaster David Cross in West Jefferson North Carolina. Learn more about global investing, how to have an international business at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

Or head south to Ecuador!

October 16-18 Ecuador Southern coastal tour

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

Join us with Peter Laub of Jyske Global Asset Management in Ecuador. Learn more about global investing, how to have an international business at the seminar.

Nov. 6-8 IBEZ Ecuador Seminar

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

Join us in the mountains and at the sea. Attend more than one seminar and tour and save even more plus get the three emailed courses free.

Attend any two Ecuador seminar or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799

Read the entire articles:

Weak Dollar? Currency, at 10-Year Low, May Fall More

Dollar Is Near Lowest in Almost Year as Borrowing Costs Plunge